Hospital will cut expenses up to $5 million this fiscal year

KEITH WHITCOMB JR.

Posted:
11/20/2012 11:42:49 PM EST

BENNINGTON - Faced with a decline in projected revenue, the hospital
intends to reduce its expenses this fiscal year by between $4 million
and $5 million, which officials say will impact an unknown number of
jobs.

Southwestern Vermont Health Care spokesman Kevin Robinson said that
over the past six months SVHC, which operates Southwestern Vermont
Medical Center, has seen a drop in revenue that appears it will
continue long-term. He said that by the end of the fiscal year the
hospital is expecting to see a $3 million to $5 million gap in
projected revenue.

Robinson said the hospital's expense budget for this year is around
$160 million, and it budgets to take in more than it spends so it can
reinvest in the facility and remain financially viable.

Robinson said that after the hospital makes its reductions for this
year, it will form a plan to reduce expenses by 15 to 20 percent over
the next five or six years.

"This work will lead to changes in the jobs people do within health
care. And yes, it will lead to fewer hospital jobs, even as we add
jobs in other health care settings," SVHC CEO Thomas Dee said in a
letter sent to SVHC employees Tuesday and to the Banner as a guest
column.

"I recently challenged our management team to reduce our expenses by
$4 to $5 million in the coming year," wrote Dee. "That's a first
step. To survive with payments at Medicare levels, we will need to
reduce our expenses by 15 to 20 percent over the next five to six
years.

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Robinson said there are no plans to shed a large number of employees,
and the hospital has yet to determine how many employees it expects
to lose. "We think within 90 days we should have a clearer plan for
reducing our fiscal expenditures for this year," said Robinson.

Dee said in an interview Tuesday that he expects there to be fewer
staff positions at the hospital itself, but those in the outpatient
services will likely increase as the health care system moves toward
a different model of care. He said that for example there may be
fewer floor nurses at SVMC's main facility in Bennington, but those
nurses can be trained to work in an outpatient setting.

Over the past few months, the hospital had reduced its work force by
3.5 full-time positions. One was an upper-management position and one
was a middle-management position, according to Robinson. Those
reductions were part of the normal course of business, as the
hospital is always looking for ways it can reduce expenses, he said.

Robinson said other hospitals in the region have been reporting
revenue losses. The losses are largely the result of fewer billable
services like surgeries and tests. He said September revenues were
particularly low this year, while October showed an increase.
However, both months were below last year's mark.

Dee said SVHC is fortunate to not be making these adjustments during
a financial crisis. He said these reductions, along with changes like
partnering with Dartmouth-Hitchock health care to take over SVMC's
medical group, are part of a long-term shift in the way things are
done. "This is the new normal," he said.

"No matter how unsettling or difficult these changes may be, we must
begin them now," wrote Dee. "We cannot wait for falling payments or
government regulation to force change upon us."

"In the coming years, we expect payments from private insurance to
drop to Medicare levels, which are below our costs. That makes
reducing expenses an imperative," Dee wrote in his letter. He went on
to write about reducing health care costs through improving
communication between providers and changing payment models to
reflect keeping populations healthy rather than the existing
fee-for-service model, which some say promotes more hospital visits
and procedures, and inflates costs.

Dee said the cost of health care is not sustainable for anyone, and
the hospital's changes are in response to federal and state efforts
to curb costs.

According to Dee, one of the aspects the hospital will be looking at
is how its current employment levels reflect the type of business it
plans to be doing in the future. He said there may be fewer jobs in
the hospital, but as more patients are nudged toward outpatient and
home care, jobs in those areas may increase.
Robinson said the hospital feels it is important that it be honest
and up-front with employees on what direction the health care group
is going. He said that after the 90 days when a clearer picture of
this year will be formulated, the hospital will work on more
long-term goals.

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